Single Home converted duplex

[Parker Max Pyper]

 Just getting started on our real estate journey and I really don’t know what the best option is going to be. When my wife and I got married, my father-in-law laid down a down payment so we could get into my wife’s dream home, fix it up, and then put it into our name.Back then we thought we would be living in this home for at least 20 years. Now that  my world has opened to real estate, our plans have drastically changed. This summer we will be leaving to do summer sales. We will be renting out the top floor as a rental, and we are finishing the basement right now. When we get back from sales, we would like to rent out the top and bottom of this place and get ourselves into a multi-family.

Here is my question. The renovations that I have done myself have increased the worth of property by a lot. What is the best way to get this house in our name while getting my father-in-law his money back and not having to pay for the added value that I put in with my own work. I have looked into putting our name on the title via a quitclaim and then doing a cash out refinance, paying my wife’s dad back and then putting anything extra into a new down payment, but I have read that we could screw ourselces over, or my wife’s day over by the IRS seeing it as a gift.

I would love any suggestions. I would love to get this house in our name ASAP and retain the money that we have put into it.

Thank you in advance.